Finn end of the wedge - days numbered for 'zero tax' foreign residents

The 1970 bilateral tax treaty between Finland and Portugal is to be altered to stop Finns living in Portugal tax free.

Portugal’s Minister of Finance, Mário Centeno, admitted that the Government has been studying 'possible changes' for a few months in the name of good fiscal relation with other countries.

The Finnish Government wants the deal to end at the end of this year and wants a new agreement for 2019 that will bring expatriate Finns into its national tax system, rather than living tax free in Portugal.

Finns that has left their homeland can move to Portugal and be exempt from paying income tax in either country if they qualify as non-habitual residents.

The Finnish Finance Minister, Petteri Orpo, commented that “...the tax treaty between Finland and Portugal will be rendered obsolete by 2019. The tax treaty is not fair. I hope that Portugal will be able to approve the new agreement as soon as possible, so that it will enter into force in 2019."

Portugal and Finland reached agreement in November 2016 on the long-term renegotiation of agreement, but a year and a half later this new agreement has not yet been submitted to the Assembly of the Republic, so keen is Portugal to have northern Europeans move here, despite the gaping inequality of well pensioned northern citizens paying zero tax alongside hard working Portuguese families paying up to 52%.

"The tax treaty between Finland and Portugal does not currently translate the idea of ​​a fair taxation of pensions, which is why the Council of Ministers proposes that it cease to apply from the beginning of 2019," the Finnish minister opined.

In September 2017, questioned about the taxation of foreign pensioners in Portugal as many other EU countries were dissatisfied, Finland first and foremost, Finance Minister Mário Centeno indicated that the Government has been pondering this for a goodly few months, oh yes, and wanted to have good tax relations with member states.

"We have been looking at this issue for a few months now, in a context that also takes into account the reality of other European countries. We think there are adjustments to be made in this area, transparency, good fiscal relations in European terms, that deserved our attention," said Centeno.

Comments

it will take some time before it can come in power as Portugal has to negotiate the double taxation agreements with all EU countries ; In our case ( Belgian) only the Belgian government can tax the pension (on the source) as they pay it . Looks like the Finish Finances want to spoil Portugal's system to attract foreigners with money in the pocket ? Spain has more or less the same system .....